(Bloomberg) -- Supermax Corp. shares sank on Thursday in Kuala Lumpur after the U.S Customs and Border Protection ordered personnel at U.S. ports of entry to seize its latex gloves made in Malaysia.
The stock slid 8.9% to the lowest level since May 2020. Trading volume was more than six times the 20-day average at the close. Shares of other glove makers Top Glove Corp. and Hartalega Holdings Bhd. also declined.
The U.S. CBP said Thursday that it issued the withhold release order against Supermax and units based on information that “reasonably indicates” the use of forced labor. Supermax in a filing said it had begun work on complying with the International Labor Organization standards since 2019, and that it would speed up the process.
Malaysia's palm oil and rubber gloves producers have grappled with intense scrutiny over poor labor practices. The CBP previously banned imports from FGV Holdings Bhd. and Sime Darby Plantation Bhd., and last month allowed Top Glove Corp., the world's largest rubber glover maker, to resume shipments to the U.S. after a yearlong ban.
The CBP identified 10 of the 11 ILO's indicators of forced labor while probing Supermax, the agency said in a statement. Supermax said it commissioned an international consulting firm on Oct. 11 to conduct an audit into the status of foreign workers at its facilities focusing on the ILO indicators.
Supermax produces up to 24 billion pieces of gloves annually, meeting about 12% of the world demand for gloves. The U.S. accounts for about 20% of the group's sales, and the company plans to divert these shipments to other markets, according to the filing.
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